August 02, 2013

Don’t Frack – At Least Until We’re Back from Summer Recess

It’s summer break time at ThePopTort, but before we go, we
wanted to alert you to a glut of news today about fracking – a process
so risky that even insurance companies are worried about it!

First, for an overview of fracking, please take a look at
the Center for Justice & Democracy’s brand new FAQ, called “Fracking, Regulation And
Obstacles To Litigation.” As we explain for those unfamiliar
with the term,

Hydraulic fracturing, commonly referred to as fracking, is
the process used by oil and gas companies to extract large amounts of natural
gas from shale rocks deep underground.
Fracking involves injecting millions of gallons of water, sand, and
chemicals into the ground at very high pressure to break up these rocks so that
the oil and gas from the rocks can flow into nearby oil and gas wells.

And no, it’s not safe.
And no, it’s not well regulated.
And no, it’s not easy to litigate over harm caused by this process. Here's more, courtesy of a few choice news
articles today:

The concentration of silica in the air workers breathe
exceeded occupational health criteria at all 11 hydraulic fracturing sites
tested by the National Institute for Occupational Safety and Health, the
American Industrial Hygiene Association announced July 31.…

Silica sand is a crucial and common component in many
fracking operations. Silica is often mixed with the water and chemicals
injected into shale formations during fracking, with silica acting as a
“proppant” to keep the underground fractures open to allow oil or natural gas
to flow. Approximately 28 million metric tons of silica sand was used in
fracking during 2012, according to the U.S. Geological Survey.

Second, speaking of the difficulties of litigating over harm
caused by fracking, in Montana,

Three conservation groups filed notice Thursday they will
appeal a federal judge's dismissal of their lawsuit seeking to force companies
to reduce greenhouse gas emissions when drilling nearly 80,000 acres of oil and
gas leases scattered across Montana.

The Montana Environmental Information Center, WildEarth
Guardians and Earthworks' Oil and Gas Accountability Project want the Bureau of
Land Management to require companies to cut methane emissions as a condition of
their leases.

Methane is considered a far more potent greenhouse gas than
carbon dioxide. It's emitted through leaking pipelines.

Third, speaking of the industry’s insistence on
nondisclosure clauses they insist upon when settling fracking lawsuits (and a
Pennsylvania case discussed in CJ&D’s fact sheet concerning a lifetime
disclosure ban imposed on the children of Chris and Stephanie
Hallowich, who sued when the family became sick from gas drilling activity near
their home),

Stephanie Hallowich told Washington County Common Pleas
Court Judge Paul Pozonsky that she agreed to the gag order in order to get
enough funds to move out of the house. But she said she didn't fully understand
the lifelong gag order on her children.

"We know we're signing for silence forever, but how is
this taking away our children's rights being minors?" she asked the judge.
"I mean, my daughter is turning 7 today, my son is 10."

Judge Polonsky didn't have an answer for her. And the
family's attorney, Peter Villari, questioned whether the order would be
enforceable.

"I, frankly, your Honor, as an attorney, to be honest
with you, I don't know if that's possible that you can give up the First
Amendment rights of a child."

Villari told StateImpact that it's the first time he's seen
this in his 35 years of practicing law.…

"That's what we've agreed to," [Range Resources's lawyer] Swetz told the
court. "Putting aside all these other issues and sort of ancillary topics,
that's what the settlement says, and that's what we've agreed to at this
point."

Range Resources seems to now be distancing itself from its
lawyer's remarks, insisting the gag order applies only to the parents.

Well, I guess that’s progress

Finally comes this fascinating piece about the insurance
industry’s reluctance to trust fracking.

Insurance providers want a clearer picture of the potential hazards of deep
well hydraulic fracturing in U.S. shale plays as they weigh the costs of
covering the risks -- or consider whether to provide insurance at all, industry
officials and experts say.

Some major global reinsurers, which traditionally pick up substantial parts
of insurance exposure, remain unwilling to take on fracking and well drilling
risks in shale plays until operating, regulatory and legal liability issues
become clearer, said Justin Russo, senior vice president of energy insurance
provider Energi Inc., based in Peabody, Mass.…

"The insurers and the reinsurers are reticent to participate if they
can't understand the risk. If they can't understand the risk, they can't price
it. That's what the insurance industry is wrestling with: 'If we write this
policy, is it going to be profitable for us?'" he added.

For example, they
think “fracking chemicals should be disclosed and usage should be tracked.” As CJ&D points out, disclosure is anathema
to this industry. Here’s more:

Lawsuits linked to fracking and deep horizontal well
operations are increasing. In the wake of several multimillion-dollar
settlements, the insurance industry has "a major stake in understanding
the scope and extent of risks potentially posed by fracking," attorney
Michael Case of the LeClairRyan law firm wrote this year in Claims
Management magazine.

An investigation by
EnergyWire found that spills, blowouts and other mishaps at onshore
oil and gas well sites increased 17 percent from 2010 to 2012 as shale drilling
activity accelerated, according to state and federal data. There were more than
6,000 spills in 2012, an average of more than 16 spills a day, EnergyWirereported last
month.

"One of the big issues is the issue of fortuity,"
Hagström said. If an accident happens and a well goes out of control and spews
out oil or gas, and it clearly was unintended or fortuitous, that is the kind
of accident that policies are intended to ensure against, he said.

"The problem I see with some of the coverage that's
being considered for the fracking issue is that you are intentionally pumping
down millions of gallons or water" with chemicals to assist the shale rock
fracturing. "If that then results in migration of methane or fracking
fluids into unintended zones, is that a fortuitous event or the result of
intentional actions?

"This issue has not made its way through the
courts," Hagström said.

Hopefully
it won’t before we’re back covering this and other important issues in a couple
weeks. See you then!

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